Airfare prices to jump if cost of oil soars: Qantas CEO

Qantas CEO Alan Joyce has warned that airlines may be forced to hike up airfares as the rising cost of oil flows through to increased fuel costs for operators.

Speaking at the Australian Financial Review Business Summit 2022, Mr Joyce said while the impact of skyrocketing oil prices is not as dramatic on airlines as it is on motorists, it will still impact the bottom line.

"Unfortunately if they [oil prices] stay at these levels airfares are going to have to go up, and we're going to have to pass them on," Mr Joyce said.

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"If it moves even further – so for every $US 4 for a barrel of oil – it's another per cent that airfares will have to improve by."

"I think it will have some impact on the levels of travel out there."

Mr Joyce said the potential of more expensive airfares could be offset by incredible demand as Australians return to regular travel in the wake of multiple COVID-19 lockdowns.

"I will say one other thing on this, is that a lot of it depends on demand. Demand is actually at the moment ahead of supply," Mr Joyce said.

"So what we're seeing on London, on the US – which is half of our international operation – we're seeing bigger demand than we can supply at the moment.

"Our ability to get those airfares up, our ability to recover that is there on international."

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The likelihood of oil prices continuing to rise now seems almost inevitable.

Overnight the US and the UK said they will ban the import of Russian oil in a dramatic sanction designed to cripple Russia's economy from within.

"We will not be part of subsidising Putin's war," US President Joe Biden said.

"Defending freedom is going to cost. It's going to cost us as well in the United States."

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The Kremlin overnight responded by warning that oil prices will jump to a near-catastrophic $US 300 a barrel after the bans.

"It is absolutely clear that a rejection of Russian oil would lead to catastrophic consequences for the global market," Russian Deputy Prime Minister Alexander Novak said Monday in an address on state television.

"The surge in prices would be unpredictable. It would be $US 300 per barrel if not more."

Currently the cost of a barrel of Brent Crude is selling for $US 128.